ASIC sues IAG units for allegedly misleading home insurance customers
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The news: The Australian Securities and Investments Commission is suing two subsidiaries of insurer IAG for misleading customers over loyalty discounts offered for certain types of home insurance.
The numbers: Insurance Australia Limited (IAL) and Insurance Manufacturers of Australia (IMA) renewed over one million home insurance policies involving the SGIO, SGIC and RACV brands between January 2017 to December 2022.
The context: The corporate regulator has alleged IAL and IMA may have increased premiums for customers before applying loyalty discounts. "IAG’s pricing algorithm operated inconsistently with their discount promises and therefore IAG failed to operate efficiently, honestly and fairly," ASIC said. It is seeking declarations of contravention, pecuniary penalties and adverse publicity orders against both companies.
In an ASX statement, IAG acknowledged the civil penalty proceedings in the Federal Court but said both subsidiaries do not agree that they misled customers, and intend to defend the proceedings.
The sources: ASIC announcement, ASX announcement
